Production-Sharing Agreements: An Economic Analysis

Production-Sharing Agreements (PSAs) are among the most common types of contractual arrangements for petroleum exploration and development. Under a PSA the state as the owner of mineral resources engages a foreign oil company (FOC) as a contractor to provide technical and financial services for exploration and development operations. The state is traditionally represented by the government or
one of its agencies such as the national oil company (NOC). The FOC acquires an entitlement to a stipulated share of the oil produced as a reward for the risk taken and services rendered. The state, however, remains the owner of the petroleum produced subject only to the contractor’s entitlement to its share of production. The government or its NOC usually has the option to participate in different aspects of
the exploration and development process. In addition, PSAs frequently provide for the establishment of a joint committee where both parties are represented and which monitors the operations.

By: K. Bindemann

Latest Tweets from @OxfordEnergy

  • The Economist cites an OIES study: until oil-exporting countries shift economies away from oil, they need to cover…

    March 16th

  • OIES's @thierry_bros interviewed by Radio Vatican on East Med gas.

    March 15th

  • After the Gazprom-Naftogaz arbitration: commerce still entangled in politics

    March 15th

Sign up for our Newsletter

Register your email address here and we will send you notification of new publications, comment, articles etc. automatically.